Crypto Investors: How to Find Out if You Owe Taxes on Your Cryptocurrency | Personal-finance

Any day now, you can expect your latest quarterly 401(k) statement from your employer that shows the current value of your life savings, and you probably anticipate that the stock and fund portion of your savings has lost value since your last statement. Knowing inflation is much higher than normal, interest rates are rising, and the economy may be headed into recession, it’s not surprising that your investments are impacted. But for the first time, in addition to your current 401(k) balance, companies show projections that illustrate what your lump sum savings might look like as monthly income after you retire. These figures may be lower than you thought.


Finding a financial advisor you can trust who has the expertise you need and is committed to working in your best interests can be overwhelming. That’s why you should consider Wealthramp’s free financial advisor matching service. Every advisor in the Wealthramp network is rigorously vetted. Answer some quick questions, review your advisor matches and schedule a free meeting with any or all of your matched advisors. Wealthramp will never sell your data. You won’t get pushy sales calls from them. If you are ready to see your best advisor matches, get started now.


So what’s next? As the Fed tightens into a slowing economy, there’s a high risk of recession, and even a mild contraction in economic growth can last for months or years. Telltale signs of recession among other things are when retail sales are falling, manufacturing slows down, businesses stop hiring, and more people either lose their jobs or get laid off. As alarming as the news might appear, recession is part of the normal business cycle. Instead of reacting, this is a good time to revisit your financial plan to position yourself to prosper.

Whether you’re managing your finances on your own or working with a trusted financial advisor to help you manage part or all of your portfolio, here are five important actions you should take now to keep your finances in fighting trim during tough economic times.

1) Keep Your Credit Score High

In a period of high inflation, it costs more for everyone to borrow money regardless of their credit score. However, people with lower credit scores will suffer even more. Lenders charge less to borrowers who’ve shown they will repay loans on time as agreed. Banks use your credit score as a handy way to see what kind of a borrower you are. If over time you’ve shown a pattern of paying debt late, lenders will be wary of lending you money. The shorthand metric used to measure borrowing behavior is your credit score — a low one means that lenders are worried you won’t pay them back. To account for that risk, lenders charge more to lend to iffy borrowers in the form of higher interest rates.

This isn’t the time to allow your credit rating to slip. If you do need to borrow money, you’ll want to do it at the lowest possible interest rate, which is reserved for those who have high credit scores over 700. If you’re carrying credit card balances year over year, have you looked at the interest rate you’re paying? A typical credit card charges you over 25% in annual interest. For example, imagine that you bought a set of summer patio furniture on sale for $10,000. If you have an outstanding balance of $10,000 on your credit cards and you don’t pay it off, it’s like adding $2,500 on top of what you paid for the table and chairs.

2) Maintain Your Cash Reserves

It’s important to get to the point where you know you have ideally six to 12 months of ready cash in an accessible account for emergencies and unexpected expenses. In a recession, that reserve fund becomes even more essential in case you lose your job or any major unexpected event happens to you and your family. If you have enough of a savings cushion, you’ll sleep better. The downside is that banks don’t pay much on their savings or money market accounts, but the benefit is that you’ll be able to access money immediately without having to potentially sell losing stocks to raise money when the market is down. It also gives you the freedom to know you won’t need to take out a loan when interest rates are going up. It seems unfair that banks are quick to raise borrowing rates and much slower to increase rates on savings accounts, but the financial safety that comes with liquid cash reserves is worth it. The best way to set aside extra dollars is to make the lifestyle choice to live under your means.

3) Invest, But Don’t Gamble

Long-term inflation eats into your savings and investment returns. When inflation is high — and recently we’ve seen inflation hit 8.6% — that means you’re paying more but getting nothing more in return. An inflation rate close to 9% is four times higher than the norm. And over the years, even at lower rates, inflation takes a toll. The best way to stay ahead of inflation is staying invested in a diverse portfolio of stocks because over time, stocks tend to grow faster than inflation.

If you’re not sure how to build a diversified portfolio designed to protect and grow your money, this is where an established financial advisor who is independent and thoroughly vetted can help. Finding a financial advisor you can trust who has the expertise to meet your financial needs and is committed to working in your best interests can be overwhelming. That’s why you might want to consider Wealthramp’s free financial advisor matching service. Every advisor in the Wealthramp network is rigorously vetted. Answer some quick questions, review your advisor matches, and schedule a free meeting with any or all of your matched advisors. Wealthramp will never sell your data. You won’t get pushy sales calls from them. If you are ready to see your best advisor matches, get started now.

Take from the experts — investing is the turtle, not the hare. John Bogle of Vanguard Group said investing is supposed to be boring — investment guru Ben Stein asks what’s wrong with average? — billionaire investor Warren Buffett never gambled. Buffett earned his billions by careful, consistent value investing. He missed the best moment to get into Apple (AAPL). To this day, he is still not invested in Tesla (TSLA). He doesn’t understand Bitcoin and doesn’t want to learn. In his entire investment career, he has rarely had a blockbuster win. So how did he accumulate so much wealth? In addition to careful investing, an often-overlooked reason is that he has lived a very long life.

4) Find Inflation Hedges

Another tactic during a recession is to choose investments that act as hedges against inflation over long periods. Gold and commodities are the go-to short-term investments for protecting your portfolio from stock market shocks because commodities like gold tend to move in the opposite direction from stocks. However, gold is a poor long-term investment, which is why many fiduciary financial advisors recommend hedging only about 5% to 10% of your portfolio. When you seek to beat inflation, one of your best tactics is to fully diversify your portfolio. That doesn’t mean randomly picking exchange-traded funds in different sectors. Diversification requires that you create a plan that you stick to and revise when market indicators show you its time. Your best bet is to connect with a financial advisor who can look at your portfolio and help you make sure it is diversified.

5) Brush Up Your Resume and Boost Your Skills

Right now, unemployment is at a historic low in the U.S. Whether it’s shallow or deep, recession often leads to companies laying off employees. The best way to protect yourself from losing your job and to ensure that you succeed in finding a new job if necessary is to make yourself as valuable an employee as possible. If your current company offers education reimbursement, jump on that benefit and work on a degree or a certification that can increase your future earnings. There are also low-cost or free training courses you can pay for yourself to boost your resume. Keep a record of your accomplishments at work to turn a standard resume and cover letter into one that helps you stand out and attract the right attention. And stay closely connected to your professional and personal network.

Actions to Take Today

As you take defensive action to protect yourself and your family from recession, decide whether to do it yourself using digital tools or collaborate with a rigorously vetted, fee-only fiduciary financial advisor who works only for you, not as an agent for a brokerage firm or insurance company. If you’re getting close to retirement, choose a fiduciary who has the expertise and specializes in retirement income planning. They can help you:

  • Make a tax-focused plan on your own or with their advice
  • Develop an investment strategy you will be able to stick to over time
  • Devise ways to pay down high-interest debt
  • Shore up cash accounts

Finding the right financial advisor can be challenging. Let Wealthramp help you find the right advisor who will help you with your personal financial needs and situation.

Pam Krueger is a recognized investor advocate, award-winning personal finance journalist, and founder and CEO of Wealthramp, a free advisor matching platform that connects people with rigorously vetted fee-only financial advisors. She is also the creator and co-host of MoneyTrack, which aired on PBS from 2005-2019, and Friends Talk Money podcast for PBS Next Avenue currently in its 7th season.

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